How to protect your pension from scams

A brief summary of changes to the conditions for ‘transfers out’ effective from 30 November 2021

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What are the new conditions?

Since 30 November 2021, new conditions must be satisfied before a member has a statutory right to have a cash equivalent transfer value (CETV) paid out from a pension scheme.  Trustees are empowered to prevent or pause a transfer request to certain types of schemes if they see warning signs of a possible scam.  The new conditions are set out in the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 (the “Regulations”).

All statutory transfers will need to satisfy either the first condition or the second condition and if neither condition is satisfied, the member loses their right to the transfer in respect of that request.

In respect of the first condition: this will be met and the member will have a guaranteed right to transfer if the member is transferring to: –

  • a public service pension scheme,
  • an authorised Master Trust scheme,
  • or an authorised collective money purchase scheme

Trustees will need to confirm the scheme type of the receiving scheme but must not request further evidence or information from the member for this purpose, other than that necessary to identify the correct receiving scheme. It is worth noting though that this does not prohibit the transferring scheme from requesting any evidence that is required to satisfy the existing requirements of the CETV regime, such as confirmation that the receiving scheme is willing to accept the transfer, or that appropriate independent financial advice has been taken where this is legally required.

In respect of the second condition, this applies to transfers to all types of schemes other than those covered by the first condition.

The second condition sets out scam risk indicators in the form of red and amber flags.  If the trustees of the transferring scheme conclude that any red flag is present, this will prevent the transfer from proceeding.  

If they conclude that any amber flag is present, the transfer can only proceed if the member provides evidence that they have taken scam-specific guidance from MoneyHelper.

MoneyHelper is a guidance service provided by the Money and Pensions Service.

Evidence of the guidance will be in the form of a unique identifier provided by MoneyHelper once the guidance session has taken place.  

In some circumstances, trustees are required to request information from a member to help them to identify whether any red or amber flags are present. This requirement will be triggered where the transfer is to an Occupational Pension Scheme (when evidence of an employment link will be requested), or where the transfer is to a Qualifying Recognised Overseas Pension Scheme (QROPS) (where evidence of overseas residency in the relevant jurisdiction will be requested).

In any other case, the transferring scheme can opt to ask the member or the receiving scheme for additional information but is not obliged to do so.  Where any information is requested from the member under the regulations, that information must be provided to the transferring scheme directly by the member, (even where a representative is acting for the member on the transfer, subject to very limited exceptions relating to lack of mental capacity).

The red flags are those circumstances where the suspicion of a scam will be strongest, and the amber flags are circumstances where there are some concerns, but where the position is less clear cut than in the red-flag scenarios. 

How does the transferring Scheme reach a decision?

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The Regulations are set out in detail in respect of the standard of proof which must be satisfied. This varies both between the first and second conditions and also between the different flags.   The range runs from “beyond reasonable doubt”, through “balance of probabilities”, to simply having “reason to believe” that some of the amber flags are present. It will be important for the transferring scheme’s trustees to be clear what standard of proof applies in each case and for them to understand how their administrators will apply these.

Once the Trustees have decided on whether the conditions are satisfied, (in a case where they are not required to seek additional information and do not decide to do so voluntarily), they can then proceed to decide whether any of the red or amber flags are present based on all relevant information which is available to them.  

On reaching a decision, there are prescribed time limits for notifications to be made to a member under the regulations, some of which are very tight, i.e., if a decision is reached that the conditions have not been met, and that the member has therefore lost the statutory right to take a Cash Equivalent Transfer Value (CETV), notification must be sent to the member within 7 working days.

The Pensions Regulator has published detailed guidance on the new conditions, which can be found below:

The above is a brief overview of the new conditions and does not include the full and detailed guidance which is available from the Pensions Regulator website.


The information provided is for general information only and is not intended to address the particular requirements of an individual or business.  It does not constitute any form of advice or recommendation by Menzies Wealth Management Ltd and should not be relied upon by individuals in either making or refraining from making any financial decisions. Where necessary, you should seek appropriate professional advice before acting on any of the information provided.

Menzies Wealth Management is authorised and regulated by the Financial Conduct Authority (486548). Registered address: 1st Floor, Midas House, 62 Goldsworth Road, Woking, GU21 6LQ Registered in England and Wales 06597008.

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